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Hong Kong

Introduction

Hong Kong is officially the Hong Kong Special Administrative Region of the People's Republic of China, is an autonomous territory on the eastern side of the Pearl River estuary in East Asia. It has been known an island in the South East part of Asia, close to Taiwan. It is an autonomous territory, and former British colony, in southeastern China.

The total an area of 2,755 km2 and shares its northern border with the Guangdong Province of mainland China.

Population

With over 7.4 million Hongkongers of various nationalities. Hong Kong is the fourth-most densely populated region in the world.

Language

The two official languages of Hong Kong are Chinese and English. Cantonese, a variety of Chinese originating from the province of Guangdong north of Hong Kong, is spoken by the vast majority of the population. Approximately half of the population (53.2%) speaks English, though only 4.3% use it natively and 48.9% as a second language

Political Structure

Hong Kong is stable jurisdiction with a very good reputation.

Hong Kong remained under British control until 1997, when it was returned to China. As a special administrative region, Hong Kong maintains a separate political and economic system apart from mainland China.

Hong Kong is a special administrative region of China and maintains a separate legislature, executive, and judiciary from the rest of the country. It has an executive-led parliamentary government modelled after the Westminster system, inherited from British colonial administration. The Basic Law of Hong Kong is the regional constitutional document, establishing the structure and responsibility of the government

As a common law jurisdiction, Hong Kong courts may refer to precedents set in English law and Commonwealth judicial rulings.

Economy

Characterised by free trade and low taxation, Hong Kong’s service economy is regarded as one of the world's most laissez-faire economic policies. It has been named the freest market economy by the Heritage Foundation Index of Economic Freedom.

Hong Kong, which has been ranked the ‘World’s Freest Economy’ for over a decade, is a regional business hub in Asia. Hong Kong has a capitalist mixed service economy, characterised by low taxation, minimal government market intervention, and an established international financial market.

Hong Kong’s proximity to China, its similarities in terms of culture, social customs and language, and its international business environment, have made it an ideal base for foreign investors to enter the Chinese market. These characteristics also help mainland investors to invest in regional and global markets. Hong Kong continues to be Asia’s second largest and the world’s third largest Foreign Direct Investment recipient.

Currency:

Hong Kong dollar (HK$) or (HKD), which is officially pegged to the US Dollar.

Exchange Control:

there are no foreign exchange controls.

Financial services industry:

Hong Kong is one of the most significant global financial centres, holding the highest Financial Development Index score and consistently ranking as the most competitive and freest economic area in the world. As the world's seventh-largest trading entity, its legal tender, the Hong Kong dollar, is the 13th-most traded currency.

Hong Kong is also one of the world’s largest banking centres with solid external net assets held by banks and deposit-taking institutions.

Based on the World Bank Doing Business Survey, Hong Kong is ranked second in terms of ease of doing business in the world. It offers a number of competitive advantages as a hub for investors to conduct their business.

Corporate Law/Act

The Hong Kong Company registry is the governing authority and companies are regulated under the Hong Kong Companies Ordinance 1984.

All companies comply the modern offshore legislation and the legal system Common Law based on English Common Law.

Type of Company/Corporation:

One IBC Limited provide Incorporation in Hong Kong Services with the type most common form are private limited and public limited.

Business Restriction:

Hong Kong Limited Companies cannot undertake the business of banking or insurance activities or solicit funds from or sell its shares to the Public.

Company Name Restriction:

It is not possible to reserve a name for a Hong Kong Limited Company. It is essential to check that there is no similar or identical name on the register, which would prevent the company being incorporated. A Hong Kong Limited Company’s name must end with “Limited”.

According to the Companies Act, a company shall not be registered by a name:

  • Which is the same as a name appearing in the Registrar's index of company names;
  • Which is the same as that of a body corporate incorporated or established under an Ordinance;
  • The use of which by the company would, in the opinion of the Chief Executive, constitute a criminal offence; or is offensive or otherwise contrary to the public interest;
  • Or any name would be likely to give the impression that the company is connected in any way with the Central People’s Government or the Government of the HKSAR or any department of either government, thus restrictions are placed on such words as, “Department”, “Government”, “Commission”, “Bureau”, “Federation”, “Council”, and “Authority”.

Company Information privacy:

Upon registration, names of company's officers will appear in the public registry, however, nominee services are available.

Incorporation Procedure

Just 4 simple steps are given to incorporate a Company in Hong Kong:
  • Step 1: Select basic Resident/Founder nationality information and other additional services which you want (if any).
  • Step 2: Register or login and fill in the company names and director/ shareholder(s) and fill in billing address and special request (if any).
  • Step 3: Choose your payment method (We accept payment by Credit/Debit Card, PayPal or Wire Transfer).
  • Step 4: You will receive soft copies of necessary documents including: Certificate of Incorporation, Business Registration, Memorandum and Articles of Association, etc. Then, your new company in Hong Kong is ready to do business. You can bring the documents in company kit to open corporate bank account or we can help you with our long experience of Banking support service.
* These documents required to incorporate company in Hong Kong:
  • Passport of each shareholder/beneficial owner and director;
  • Proof of residential address of each director and shareholder (Must be in English or certified translation version);
  • The proposed company names;
  • The issued share capital and par value of shares.

Compliance

Share Capital:

The Share Capital can be issued in any major currency. The usual minimum issued is 1 HKD and the usual authorised is 10,000 HKD.

The new Companies Ordinance abolished the par value concept, under the old Companies Ordinance, companies’ shares have a par value (nominal value), representing the minimum price at which such shares can generally be issued. The new act adopts a system of no-par value for shares which applies to all shares of Hong Kong incorporated companies.

Classes of Shares Permitted: Ordinary shares, preference shares, redeemable shares and shares with or without voting rights, subject to the articles of Association.

Bearer shares are not permitted.

Director:

Only one director is required, but at least 1 natural person and there are no restrictions on nationality and there is no requirement for board meetings to be held in Hong Kong.

Shareholder:

Only one shareholder is required and shareholder meetings do not have to take place in Hong Kong. Nominee shareholders are allowed and anonymity can be achieved by the use of our nominee shareholder service.

Beneficial Owner:

The Companies Amendment Ordinance 2018, requires all companies incorporated in Hong Kong to maintain up-to-date beneficial ownership information, by way of keeping a Significant Controllers Register.

Hong Kong Company Chop/Seal:

A corporate seal, called a “company chop” in Hong Kong is mandatory for Hong Kong companies.

Taxation:

Hong Kong is a unique location for the incorporation of companies and for international business since its tax system is based on source and not on residence. As long as a Hong Kong company does not conduct any business in Hong Kong, and does not generate any income from Hong Kong-based sources, the company will not be taxable in Hong Kong.

For a year of assessment commencing on or after 1 April 2018, profits tax is chargeable for a corporation:

Assessable Profits Tax Rates
First HK$2,000,000 8.25%
Beyond HK$2,000,000 16.5%

Finance statement:

Each year, the company must submit an annual return. The Companies Registry is increasingly vigilant in relation to annual return submissions, and penalties apply for late filings.

Local Agent:

A Hong Kong company must have a Company Secretary who can either be an individual or a limited company. If the secretary is an individual, they must be a resident in Hong Kong. If the secretary is a company, then its registered office must be in Hong Kong.

Double Taxation Agreements:

  • Hong Kong has entered into Comprehensive Double Taxation Agreements / Arrangement (DTAs) with a number of jurisdictions. DTAs are also referred to as tax treaties. They prevent double taxation and fiscal evasion, and foster cooperation between Hong Kong and other international tax administrations by enforcing their respective tax laws.
  • Hong Kong has comprehensive double tax agreements with Asian and European countries.
  • The Hong Kong Inland Revenue Department allows a deduction for foreign tax paid on a turnover basis in respect of income which is also subject to tax in Hong Kong.

License

License Fee & Levy:

The person, who wants to incorporate new company in Hong Kong, needs to pay two types of Government fee. This fee depends on Hong kong government rules and we cannot adjust it.

The Business Registration Fee, currently HK$2250 on the date of incorporation and then annually on the anniversary of the incorporation. (Special tax concession arrangement by the HKSAR is granted on or after 1 April 2016; the Business Registration fee of each company is HK$2250).

Payment, Company return date Date:

  • Prior to the annual renewal of your company, One IBC Limited will contact you to collect the company’s bank statements and other supporting documents and prepare the account and audit works in order to deal with the tax declaration and to file the PTR (Profits Tax Return) and ER (Employer Return) with the Hong Kong authorities. Profits Tax Returns must, as a general rule, be submitted within one month from the date that they are issued. If the tax return is not submitted by the due date, it is considered as an offence, and will be subject to government penalty.
  • All companies must renew their business registration with the Inland Revenue Department (IRD) annually and are required to file a set of audited accounts with the IRD annually.

Company Restoration

We can restore your Hong Kong company if struck off the Hong Kong Companies Register. Struck off companies are restored automatically on payment of all outstanding licence fees, penalties and the government company restoration fee.

Once your Hong Kong company is restored to the register it is deemed never to have been struck off and deemed to be in continued existence.

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